Amazon Keyword Bidding Strategy

It’s no secret that advertising is crucial to generating sales and growing brand recognition. That’s why sellers on Amazon run sponsored campaigns to stay on top of their customers and foster brand loyalty. But sponsored campaigns won’t work unless you set them up correctly. By creating an Amazon keyword bidding strategy, you can optimize your campaigns and net you the results you want to achieve.

In this article, we’ll discuss how you can set keywords strategically so that you can win auctions for sponsored products.

How does keyword bidding work on Amazon?

First things first, let’s talk about what keyword bidding is all about. Amazon runs an advertising platform called Amazon PPC (pay-per-click) that allows sellers to bid on specific keywords. The purpose of this is to make sure your ad appears on top of the search results so that customers will see it first. Statista reveals that sponsored ads increase brand awareness by 80%, thus giving you more reason to nail your keyword bids (according to PPCprotect.com).

For example, a customer searches for ‘running shoes’ on Amazon. The seller with the highest bid wins the auction, and Amazon will display the winning ad. Your goal is to be in the number one position for your keyword to drive sales to your product. It’s a straightforward concept that allows sellers to put their products in the best place to succeed.

The great thing about Amazon PPC is that it operates on a second-price auction system, and this means that when you win the auction, you only pay $0.01 more than the second-highest bidder. Say you bid $1.80 on the ‘running shoes’ keyword, and the second-highest bidder bid $1.30. When you win, you’ll only pay $1.81 each time a customer clicks your ad.

How to win keywords with Amazon keyword bidding strategies

Now that you understand how keyword bidding works, it’s time to look at the different keyword bidding strategies available to you. Amazon gives you three options: dynamic bids: down only, dynamic bids: up & down, and fixed. Each keyword strategy has its advantages and allows you to set up your ad campaigns exactly how you like them. Let’s discuss these three options below.

1. Dynamic bids: down

If you’re new to selling on Amazon and you’re working with a limited budget, then this keyword bidding strategy is the one for you. Amazon lowers your bid up to 100% of your ad is less likely to convert. This type of bidding strategy is perfect for maintaining your advertising cost of sale (ACOS) and sets your campaign for a profit-driven approach.

2. Dynamic bids: up & down

Sellers with more budget to work with will benefit from this keyword bidding strategy. Here, Amazon will raise or lower your bid depending on your ad’s potential to convert, allowing you to win more impressions and customize your ad campaigns accordingly. The added flexibility means you can determine an adequate bid for your brand.

3. Fixed bids

Fixed bids are where your bids remain constant. Here, Amazon will keep your bid the same despite the increased likelihood of a conversion. The advantage here is that sellers can fully control how much they spend on a given keyword. This keyword bidding strategy will best serve those who prefer to tread cautiously.

The downside is that you risk overpaying for ad clicks, especially when few competitors are bidding. You have to be confident in your bid knowing that you don’t have the flexibility, unlike dynamic bids.

Keyword research is a crucial part of a successful ad campaign. You need to make sure that you’re bidding only on relevant keywords so that you can generate clicks in your ad. Keep in mind that Amazon is a user-based platform, and the last thing they want is to bog down the user’s shopping experience by showing irrelevant products.

Having a solid understanding of your target audience and what they’re typing in the search box will help your ads show at the right place at the right time. When paired with the right keyword bidding strategy, you’ll be able to generate sales and outperform your competitors.

Tips on optimizing your keyword bidding strategy

The Amazon ecosystem is constantly evolving, and those who adopt are the ones who thrive on the platform. Changes can appear in the form of customer behavior or new competitor strategies. If you don’t optimize your keyword bidding strategy, you’ll end up losing sales (and money) on your ad campaigns. Here are a couple of tips you can follow to dial in your keyword bids and lock in those sales.

1. Aim for low-volume keywords

As an advertiser, you may feel the need to bid on high-volume keywords as those can generate the most sales. But do note that high-volume keywords are very competitive, and the cost-per-click (CPC) is also high. If you’re starting on Amazon PPC, the best way to approach your bids is to target low-volume keywords.

Sure, low-volume keywords generate less traffic, but that means you have less competition as well. The benefit of targeting low-volume keywords is maximizing profit while minimizing your ACOS. There’s no point in driving lots of traffic if you can’t get them to convert. Long-tail keywords, in particular, are quite relevant and will help you achieve a healthy conversion rate.

2. Adjust your bids incrementally

Figuring out the correct bid for a new keyword can be pretty tricky as it requires a lot of patience and thinking. For example, you bid $5 on a new keyword and dropped it to $3 due to poor conversion rates. When you do this to your other keywords, you’ll end up with a high ACOS that will impact the profitability of your brand.

Instead of overpricing yourself, you should adjust your bids incrementally. Set a keyword bid at $1 one day and $1.50 the next. Observe the clicks and conversions as you gradually increase the price. By doing this, you keep your ACOS low as you determine the correct bid.

While this ‘inch-up’ method won’t generate results quickly, it does help you save money and build momentum as you figure out the correct bid.

3. Keep an eye on your competitors

You may wake up one day and notice that your CPCs have gone up. New competitors have likely entered the market, and if you don’t increase your keyword bid, you’ll end up losing visibility on your ads.

If your CPCs have gone down, your competitors have likely lowered their bids. Part of a successful keyword bidding strategy is knowing what your competitors are doing. When you watch your competitors, you can make the necessary adjustments to optimize your keyword bidding strategy.

4. Make use of negative targeting

Do you have problems with high ACOS because of keywords that don’t convert? One solution is to restrict your ads from showing for irrelevant searches. Amazon allows you to mark a keyword as ‘negative’ to help save money and increase your conversion rate. The question is, how do you know which keywords to add to your negative list? Simple; look for keywords that drive plenty of clicks but with little conversion.

For example, if you sell ‘sneakers’ but not ‘cross-trainers,’ you can block your ad from appearing for that search result. Negative targeting optimizes your ad for qualified users and improves product ranking, both of which can help drive sales.

5. Optimize, optimize, optimize

With Amazon PPC being a highly competitive landscape, the ‘set-it-and-forget-it’ approach won’t work. You need to constantly monitor your campaigns and optimize them regularly to ensure you stay on top of your competitors. Running sponsored campaigns a lot of time, effort, and patience to get your desired results, but once you do it right, you’ll be able to generate more sales than ever before.

The key is to recognize trends and evaluate your competition. That way, you can make strategic adjustments and make your ads more visible to your target audience. Of course, there’s still a possibility that you’ll over-analyze your ad campaigns. We recommend focusing on essential things like ad impressions, clicks, and conversions so that you can tweak your keyword bidding strategy accordingly.

Conclusion

A lot of work goes into running a successful sponsored campaign on Amazon. For beginners, the process may feel complicated at first, but as they say, experience is the best teacher. Please focus on the basics, and implement the tips that we’ve mentioned in this article. Over time, you’ll better understand how much to bid and optimize your campaigns.

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